9/12/2014

ClimateandtheSteelIndustry|GreenBiz

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Togglenavigation

ClimateandtheSteelIndustry
February,2006

TheBigPicture
TheUnitedStateshistoricallyhasbeenoneofthe
largeststeelproducersintheworld,once
producingnearly13%oftotalworldproduction.
Therearemorethan1,200firmsoperatinginthe
U.S.,althoughtheabsolutenumberofintegrated
mills(producingsteelinbasicoxygenfurnaces)is
about20.TheU.S.demandforsteelproducts
playsamajorroleinautomobilemanufacturing
andinconstruction.Duetoworldwide
overcapacity,steelimportsnowaccountforabout
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afifthtoaquarterofallsteelusedannuallyinthe
UnitedStates.Globalsteelproductionin2005was
up6.1%overtheyearbefore,sustainedbyChina
whereproductionincreasedby25.5%andIndia
whichincreasedby16.6%.
Materialuse,energyuse,andcarbonemissionsby
thesteelindustrydependonproductionrates.
Increasedproductionratestendnotonlyto
increaseinputrequirementsandemissionsbutare
accompaniedbyhighercapacityandprofitsand
thepotentialforcapitalinvestmentsinnew
technologiesandshiftsinthemixoftechnology,
forinstancefrombasicoxygenfurnaces(BOF)to
electricarcfurnaces(EAF).Intermsof
environmentalsustainability,scrapsteelisoneof
themostrecyclableandrecycledmaterialsin
NorthAmerica,withanoverallrecyclingrateof
about68%.
Steelisakeyelementofanydomesticemissions
reductionscenariobecausethesteelindustry
(includingironproduction)isamongthelargest
energyconsumersinthemanufacturingsector.
Themanufactureofsteelinvolvesmanyenergy
intensiveprocessesthatconsumeraworrecycled
materials,suchasironoreandscrapmetal,from
aroundtheworld.Rawmaterialswithintrinsic
carboncontents(e.g.,ironcarbide,carbon
electrodes,chargecarbon,orlimestone),the
primaryresourcesforsteelproduction,canhave
materialsignificanceinthecalculationofclimate
impacts.Virtuallyallofthegreenhousegas
emissionsassociatedwithsteelproduction,
however,consistofthecarbondioxideemissions
relatedtoenergyconsumptiontheprimaryfocus
ofclimaterelatedimpactsinthesteelindustryare
thoseassociatedwithcarbonrelatedenergy
sources.Energyconsumptioninsteelproduction
representsabout2.5%ofdomesticenergyuseand
about8%ofallU.S.manufacturingenergyuse.
Abouthalfofthesteelindustry'senergyisderived
fromcoalandalargeportionofthisisconsumed
duringthereductionofironoretopigiron.
Finally,thesteelindustryisamajorconsumerof
electricity,usedtopoweritssubstantial
productionprocesses.Althoughtherearenodirect
emissionsofcarbondioxideassociatedwiththe
consumptionofelectricity,coalandgasfired
energysourcesarestandardfactorsinthe
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reportingprotocolsforgreenhousegasesand
representasignificantcomponentofsteelindustry
energyusage.Allmatureindustries,including
steelproducers,canbeexpectedtomeasuredirect
andindirectclimaterelatedimpactsthroughthe
useofrecognized,reliable,consistent,and
transparentcalculationandreportingof
greenhousegasesforinternalcompanyuseandfor
reportingtothepublic,aswellastospecific
audiencessuchasgovernmentsandspecial
interestgroups.

KeyPlayers
Companiesinthesteelindustry.Steel
manufacturersarealsosearchingforways
toreducetheirenvironmentalimpactwhile
maximizingprofits:
MittalSteelCompanyN.V.,headquartered
inRotterdam,istheworld'slargest
consolidatedsteelcompanywithshipments
of42.1milliontonsandrevenuesofover
$22billionin2004.MittalSteelUSA
claimstobeoneofthelargeststeel
producersintheUnitedStates,formedfrom
thecombinationofMittalSteel'sexisting
U.S.business,IspatInland,withtheassets
ofInternationalSteelGroup.
UnitedStatesSteelCorporation,
headquarteredinPittsburgh,Pa.,
manufacturesawidevarietyofsteelsheet,
tubularandtinproductscoke,andtaconite
pelletsandhasaworldwideannualraw
steelcapabilityof26.8millionnettons.
LargelyduetoChinesedemandforsteel,
whichboostedpricesaroundtheglobe,U.S.
Steelswungfromalossin2003toa$1.1
billionprofitin2004.
NucorCorporation,whichalsoclaimstobe
thelargeststeelproducerintheUnited
States,hadnetsalesof$11.3billionin
2004.Nucoristhenation'slargestrecycler.
In2004,Nucorrecycledapproximately17
milliontonsofscrapsteel,with5millionof
thosetonsbeingautomobiles.
Tradeassociations.Representing
individualcompaniesaretrade
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organizationswhich,amongotherfunctions,
havethepowertonegotiatewith
governmentagenciesonvoluntary
environmentalinitiatives.
U.S.EnvironmentalProtectionAgency
andothergovernmentagencies.TheEPA
hasworkedwiththesteelindustryto
developandmaintainavoluntary
greenhousegasemissionreductionprogram.
Nongovernmentalorganizations.The
globalchallengepresentedbyclimate
changeandgrowingenergydemandshave
gainedtheattentionofcivilsociety
organizationsaroundtheworldandhave
givenrisetotheWRI/WBCSDGHG
ReportingProtocolandtheGlobal
ReportingInitiative.Additionally,socially
responsibleinvestorsandshareholdersare
activelyseekingcorporatecommitmentsto
energyandemissionsmanagement.Civil
societyorganizationsandnongoverning
organizationsarenowonparwithmany
governmentsasamongtherecognized
arbitersoflegitimacyincorporatesocial
responsibilitymanagementandreporting.

TheUpside
Companiescansavemoneyby
implementingenergyefficiencies
throughoutthelifecycleofsteelproducts.
Themarketforrecycledsteelproductsis
growingandconsumersaredemanding
environmentalresponsibleproducts.
Recyclingandreuseactivitiesarevaluedas
thekeytosustainabilityandrepresentand
importantenvironmentalservice.
Efficiencyandcontentcertificationschemes
allowcompaniestogainrecognitionfor
theiractivities.

RealityCheck
Seriousquestionsremainabouttheroleof
majormaterialssuppliersinrespondingto
climatechange.Bothindustrieshave
developedvoluntaryenergyandemissions
reductioninitiativesincooperationwiththe
U.S.DepartmentofEnergyandtheU.S.
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EnvironmentalProtectionAgency.
However,mostvoluntaryprogramsharness
thepossibilityforreducingtheintensityof
environmentalimpactpertonofproduct
producedratherthancallingforactual
reductions.
Companiesthatengageinemissions
reductionandenergyefficiencyprograms
mustcompeteinaglobalmarketplacethat
includeshighlypollutinginefficient
productionactivities.Theenvironmental
impactsofsteelproductionworldwideare
morewidespreadthananyonecompany,
andcannotbesolvedwithoutcooperation
amongcompanies,governmentsandNGOs.
>

ActionPlan
Assessyourfootprint.Determinewhatthe
majoremissionsofgreenhousegasesarefor
yourcompany.Theseincludethesupply
chainsourcesofcarbonaswellasemissions
fromdirectenergyusageandelectricity
purchases.
Makeameasurableandverifiable
commitmenttoenergyefficiency.Oneof
thebestwaysforsteelcompaniestoreduce
theirclimatechangefootprintandrealize
significantcostsavings,istoincreasethe
energyefficiencyoftheirprocesses,
includingmanufacturingandtransportation.
Increasetransportationefficiency
throughoutthesupplychain.Theocean
andgroundfreightindustryisnow
recognizedasacriticallinkinthesupply
chainofallindustries.Initiativessuchas
EPA'sSmartWayTranportPartnersare
designedtoincreaseenergyefficiencywhile
significantlyreducinggreenhousegasesand
airpollution.Corporatecommitmentsto
climatemanagementnowincludetracking
andestablishingamoreefficient
transportationfuturebyadoptingfuel
savingstrategiesthatincreaseprofitsand
reduceemissions.
Demonstrateyourcommitmentthrougha
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voluntaryemissionsreductionprogram.
Thesteelindustryhasdevelopedvoluntary
energyandemissionsreductioninitiativesin
cooperationwiththeU.S.Departmentof
EnergyandtheU.S.Environmental
ProtectionAgency.Mostvoluntary
programsharnessthepossibilityfor
reducingtheintensityofenvironmental
impactpertonofproductproducedrather
thancallingforactualreductions.
Adoptspecificpoliciesforresponsible
procurementtoensurepurchasing
decisionsarealignedwithenvironmentally
sustainableprinciples.
Committotheuseofbiofuelsandother
renewablestopowerindustrialprocesses.
Sustainablesuppliesofbiofuelsarethought
tobeclimateneutral,thatis,carbonisbeing
recycledwithnonetadditionstothesystem.
Assuch,itisanattractivesourceof"green
andclean"energythatisreceivingserious
attentioninenergymarkets,especiallythose
marketswitheasyaccesstobiomass
supplies.
Certifyrecyclingcontentand
managementpracticeswithanestablished
organization.Oneofthemostsignificant
rolesthatthesteelindustrycanplayin
termsofenvironmentalsustainabilityand
corporateclimatemanagementisoneof
continuedleadershipandinnovationwith
regardtorecycling.
Beginplanningenergyandtechnology
optionsfornextgenerationofproduction.
Greenhousegastargetsandcommitments
forpost2012shouldincludeenergysupply
anddemandrelatedmilestones,
includingtargetsforgreenpowergreen
heatandadvancedbiofuelscarbondioxide
capture,transportandsequestrationand
energyefficiencyandconservation.

Leads
TheU.S.EPAClimateLeadersprogram
encouragescompaniestodeveloplongterm,
comprehensivestrategiesforreducinggreenhouse
gasemissions.
TheAmericanIronandSteelInstituteplaysa
strongroleinpromotingenvironmental
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responsibilitywithintheintegratedsteelindustry.
TheWorldBusinessCouncilforSustainable
Development'sGreenhouseGasProtocol
Initiativeworkstodesign,disseminate,and
promotetheuseofaninternationalprotocolfor
measuringandreportingemissions.
SteelIndustryoftheFutureisaU.S.
DepartmentofEnergyprogramfocusingfocuses
onthedevelopmentandcommercializationofnew
orimprovedmaterialstoenhanceproductivity,
productquality,andenergyefficiencyinthesteel
industry.
TheU.S.EPAreleasedtheprotocolDirect
EmissionsfromIronandSteelProductionin
2003tohelpcompaniesintheironandsteel
industriesmeetthegreenhouseinventory
requirementsofitsClimateLeadersprogram.

TheBottomLine
Steelcompanieshavemanyopportunitiesto
improvetheirmanagementpracticesandrespond
effectivelytothechallengesofclimatechange.
Manyleadersinthesteelindustry,aswellasin
othersectors,arebeginningtoadapttheir
practicestoreducegreenhousegasemissionsand
minimizeoverallclimateimpact.Theyhave,for
example,launchedvoluntaryemissionreduction
programsandparticipateinemissionstrading
markets.WiththeonsetoftheKyotoProtocolthe
industrywillbeexpectedtocalculateandmanage
actualreductionsingreenhousegasemissions,as
opposedtoimprovementsinemissionsintensity
levelsthatoccurnormallyovertime.Purchasing
andproducingrenewableenergy,investinginlow
carbontechnologies,workingtoimproveenergy
efficiency,andofferingnewproductsandservices
aimedatreducingemissionsareallmeaningful
strategiesforthesteelindustrytoundertake.
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